10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 29, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 01-34219

 

DESTINATION XL GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

04-2623104

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

555 Turnpike Street

Canton, MA

02021

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (781) 828-9300

 

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

DXLG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 12, 2023, the registrant had 62,895,439 shares of common stock, $0.01 par value per share, outstanding.

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

 

DESTINATION XL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

 

April 29, 2023

 

 

January 28, 2023

 

 

 

(Fiscal 2023)

 

 

(Fiscal 2022)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,933

 

 

$

52,074

 

Short-term investments

 

 

16,064

 

 

 

 

Accounts receivable

 

 

1,186

 

 

 

1,720

 

Inventories

 

 

100,258

 

 

 

93,004

 

Prepaid expenses and other current assets

 

 

7,709

 

 

 

7,214

 

Total current assets

 

 

155,150

 

 

 

154,012

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation and amortization

 

 

35,766

 

 

 

39,062

 

Operating lease right-of-use assets

 

 

125,981

 

 

 

124,356

 

Deferred income taxes, net of valuation allowance

 

 

29,072

 

 

 

31,455

 

Intangible assets

 

 

1,150

 

 

 

1,150

 

Other assets

 

 

549

 

 

 

563

 

Total assets

 

$

347,668

 

 

$

350,598

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

25,879

 

 

$

27,548

 

Accrued expenses and other current liabilities

 

 

27,074

 

 

 

36,875

 

Operating leases, current

 

 

37,071

 

 

 

37,329

 

Total current liabilities

 

 

90,024

 

 

 

101,752

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Operating leases, non-current

 

 

106,845

 

 

 

106,912

 

Other long-term liabilities

 

 

5,127

 

 

 

4,706

 

Total long-term liabilities

 

 

111,972

 

 

 

111,618

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued

 

 

 

 

 

 

Common stock, $0.01 par value, 125,000,000 shares authorized, 78,495,557 and 78,229,861 shares issued at April 29, 2023 and January 28, 2023, respectively

 

 

785

 

 

 

782

 

Additional paid-in capital

 

 

322,941

 

 

 

321,516

 

Treasury stock at cost, 15,625,172 shares at April 29, 2023 and January 28, 2023, respectively

 

 

(105,386

)

 

 

(105,386

)

Accumulated deficit

 

 

(67,789

)

 

 

(74,756

)

Accumulated other comprehensive loss

 

 

(4,879

)

 

 

(4,928

)

Total stockholders' equity

 

 

145,672

 

 

 

137,228

 

Total liabilities and stockholders' equity

 

$

347,668

 

 

$

350,598

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

2


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

 

April 29, 2023

 

 

April 30, 2022

 

 

 

 

(Fiscal 2023)

 

 

(Fiscal 2022)

 

 

 

 

 

Sales

 

$

125,442

 

 

$

127,655

 

 

Cost of goods sold including occupancy costs

 

 

64,526

 

 

 

63,788

 

 

Gross profit

 

 

60,916

 

 

 

63,867

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

 

48,281

 

 

 

46,597

 

 

Impairment (gain) of assets

 

 

 

 

 

(351

)

 

Depreciation and amortization

 

 

3,477

 

 

 

3,987

 

 

Total expenses

 

 

51,758

 

 

 

50,233

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

9,158

 

 

 

13,634

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

339

 

 

 

(143

)

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

9,497

 

 

 

13,491

 

 

Provision for income taxes

 

 

2,530

 

 

 

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

6,967

 

 

$

13,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.11

 

 

$

0.21

 

 

Net income per share - diluted

 

$

0.11

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

62,690

 

 

 

64,080

 

 

Diluted

 

 

66,316

 

 

 

68,370

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

3


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

For the Three Months Ended

 

 

 

 

April 29, 2023

 

 

April 30, 2022

 

 

 

 

(Fiscal 2023)

 

 

(Fiscal 2022)

 

 

Net income

 

$

6,967

 

 

$

13,388

 

 

 

 

 

 

 

 

 

 

Other comprehensive income before taxes:

 

 

 

 

 

 

 

Foreign currency translation

 

 

 

 

 

(4

)

 

Pension plans

 

 

66

 

 

 

67

 

 

Other comprehensive income before taxes

 

 

66

 

 

 

63

 

 

Tax provision related to items of other comprehensive income

 

 

(17

)

 

 

 

 

Other comprehensive income, net of tax

 

 

49

 

 

 

63

 

 

Comprehensive income

 

$

7,016

 

 

$

13,451

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

4


 

 

 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance at January 28, 2023

 

 

78,230

 

 

$

782

 

 

$

321,516

 

 

 

(15,625

)

 

$

(105,386

)

 

$

(74,756

)

 

$

(4,928

)

 

$

137,228

 

Board of directors' compensation

 

 

15

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

Stock compensation expense

 

 

 

 

 

 

 

 

404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

404

 

Restricted stock units (RSUs) granted for achievement of performance-based
compensation, reclassified from liability to equity

 

 

 

 

 

 

 

 

1,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,146

 

Issuance of common stock, upon RSUs release

 

 

251

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement

 

 

(81

)

 

 

(1

)

 

 

(445

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(446

)

Exercise of stock options

 

 

81

 

 

 

1

 

 

 

215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

216

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

49

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,967

 

 

 

 

 

 

6,967

 

Balance at April 29, 2023

 

 

78,496

 

 

$

785

 

 

$

322,941

 

 

 

(15,625

)

 

$

(105,386

)

 

$

(67,789

)

 

$

(4,879

)

 

$

145,672

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

5


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Deficit

 

 

Loss

 

 

Total

 

Balance at January 29, 2022

 

 

77,025

 

 

$

770

 

 

$

319,511

 

 

 

(12,755

)

 

$

(92,658

)

 

$

(163,879

)

 

$

(5,525

)

 

$

58,219

 

Board of directors' compensation

 

 

29

 

 

 

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125

 

Stock compensation expense

 

 

 

 

 

 

 

 

366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

366

 

RSUs granted for achievement of performance-based
compensation, reclassified from liability to equity

 

 

 

 

 

 

 

 

1,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,138

 

Issuance of common stock, upon RSUs release

 

 

313

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for taxes related to net share settlement

 

 

(85

)

 

 

(1

)

 

 

(414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(415

)

Exercise of stock options

 

 

41

 

 

 

1

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

(946

)

 

 

(4,847

)

 

 

 

 

 

 

 

 

(4,847

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 

67

 

Foreign currency, net of taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,388

 

 

 

 

 

 

13,388

 

Balance at April 30, 2022

 

 

77,323

 

 

$

773

 

 

$

320,745

 

 

 

(13,702

)

 

$

(97,505

)

 

$

(150,491

)

 

$

(5,462

)

 

$

68,060

 

The accompanying notes are an integral part of the consolidated financial statements.

 

6


 

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

April 29, 2023

 

 

April 30, 2022

 

 

 

(Fiscal 2023)

 

 

(Fiscal 2022)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

6,967

 

 

$

13,388

 

Adjustments to reconcile net income to net cash used for by operating activities:

 

 

 

 

 

 

Amortization of deferred debt issuance costs

 

 

19

 

 

 

19

 

Impairment (gain) of assets

 

 

 

 

 

(351

)

Gain from the sale of equipment

 

 

(96

)

 

 

 

Depreciation and amortization

 

 

3,477

 

 

 

3,987

 

Deferred taxes, net of valuation allowance

 

 

2,383

 

 

 

 

Stock compensation expense

 

 

404

 

 

 

366

 

Board of directors' stock compensation

 

 

108

 

 

 

125

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

534

 

 

 

938

 

Inventories

 

 

(7,254

)

 

 

(15,104

)

Prepaid expenses and other current assets

 

 

(495

)

 

 

(1,462

)

Other assets

 

 

(5

)

 

 

(20

)

Accounts payable

 

 

(1,669

)

 

 

4,248

 

Operating leases, net

 

 

(1,950

)

 

 

(1,874

)

Accrued expenses and other liabilities

 

 

(6,657

)

 

 

(5,803

)

Net cash used for operating activities

 

 

(4,234

)

 

 

(1,543

)

 

 

 

 

 

 

 

Cash flows from investing activities: